Biden may boost Texas oil industry
WASHINGTON — With his $2 trillion plan to cut greenhouse gas emissions, Joe Biden might seem a far from ideal president for the Texas oil and gas industry.
But new analysis by Goldman Sachs says that compared with a second term of the Trump administration, a Biden presidency could be a positive for U.S. oil and gas drillers because tougher regulations on hydraulic fracturing would likely reduce production, raising crude prices.
“We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst,” analysts at Goldman Sachs wrote in a research note Sunday, according to CNBC. “Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone.”
In the thick of a coronavirus pandemic that has decimated global oil demand, West Texas Intermediate, the U.S. benchmark for crude, was trading around $40 per barrel Monday. Without a sharp rise in economic activity or a cut in global supply, prices could remain low for many months, if not years, to come.
That has prompted some in Texas to raise the prospect that the state’s Railroad Commission could regulate production again — something it has not done since the 1970s — to limit a massive crude glut coming out of the Permian Basin.
Biden’s move to toughen rules on oil and gas drilling could have a similar effect, by raising the costs of production and pushing out less effi
cient drillers.
Democrats in Texas are already jumping on the analysis, sending an email blast to supporters and media Monday.
“To save Texas energy, we must elect Democrats in November,” Texas Democratic Party Communications Director Abhi Rahman said in a statement. “Texas Democrats believe in an ‘all of the above’ energy approach. Both our oil and gas and renewable en
ergy sectors will make sure Texas remains one of the world’s greatest energy producers.”
President Donald Trump has made growing the U.S. oil and gas industry a priority in his first term, loosening environmental regulations that industry at-large has long complained about.
But the impact of such policies is likely to be “modest at best” over the next four years, Goldman analysts wrote, “given the more powerful shift in investor focus” away from fossil fuels.